Update: 6,000 UK jobs at risk as Game confirms plan to enter administration
RETAILER Game conceded defeat in its survival battle today after failing to raise new funding, jeopardising around 6,000 jobs in the UK.
The group, which was reportedly battling to raise �180million this week, said it intended to appoint administrators as rescue talks had not made sufficient progress.
Game, which operates 600 stores in the UK and 1,300 worldwide, intends to appoint administrators in the coming days but in the short term it will continue to trade as discussions with its banks and other potential funders continue.
This will fuel expectations that it will attempt a pre-pack administration deal involving the sale of some of its estate.
It is understood that one of Game’s main lenders, taxpayer-backed Royal Bank of Scotland, objected to the terms of a rescue deal with private equity firm OpCapita, which recently bought electrical goods retailer Comet.
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Earlier today, Game’s shares were suspended “pending clarification of the company’s financial position”. Game’s statement to the stock market added that it believed the company had “no value”.
In a second statement later, it added: “Further to this morning’s announcement of the suspension of trading in shares of Game Group plc, the board has concluded that its discussions with all stakeholders and other parties have not made sufficient progress in the time available to offer a realistic prospect for a solvent solution for the business. The board has therefore today filed a notice of intention to appoint an administrator.
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“In the short term the board’s intention is that the business will continue to trade and discussions with lenders and third parties will continue under the protection of the interim moratorium.”
It has been reported that Game faces a �21 million rent payment due on Sunday and a �12 million wage bill at the end of the month, and owes more than �10 million in VAT and �40 million to suppliers.
Game, whose UK store locations include Ipswich, Bury St Edmunds, Colchester, Clacton, Braintree and Chelmsford, has borne the brunt of dire trading in recent months, which has forced the chain to ask its suppliers for more generous trading terms.
Some of them have instead stopped supplying Game with new releases, such as Mass Effect 3 and Street Fighter X Tekken, leaving fans disappointed and adding to the group’s trading woes.
Game agreed fresh lending facilities with banks last month and began seeking access to alternative sources of funding earlier this month.
It has already signalled that losses for the year to the end of January are likely to be around �18 million.